What is your biggest worry as a parent?
For me, it’s definitely our AC running out.
I live in the American South where the hottest summer days can get above 100 degrees F and humidity can be over 70%, resulting in a heat index of like 120 degrees F.
Days like that kill people.
They say money can’t make you happy, but I know for sure that not worrying about my AC breaking during July or August would make being happier easier.
That’s why the most important account you can have as a mom is an emergency savings account.
What is an emergency Account?
An emergency savings account is different from a traditional savings account.
A traditional saving account is for long term goals like retirement, buying a home, or starting a business.
An emergency account is exactly what it sounds like: a savings account reserved strictly for emergencies, like if your car breaks down or a someone needs sudden dental work.
The easiest way to save is to set up direct deposit from each check. Set it and forget it. It will grow with no effort!
Wondering where you are going to get money for this account? Click here to find out!
Does saving money for an emergency seem beyond your ability? Click here to join my Facebook Group for support!
How much should you put away?
This is a question that can only be answered by you!
Dave Ramsey suggests putting away 6 months worth of expenses in case of things like job loss, but I think for people who are struggling or just starting on this journey, that figure is deflating.
I think a goal of $1,000 is a good place for most moms to start. It’s enough to relieve the stress associated with smaller emergencies.
Once you reach that goal, then you pick your next goal and keep going.
Where to keep the money?
Never keep large quantities in cash. First, because if you lose it or are robbed, it’s gone. Second, it will not appreciate.
Savings accounts earn tiny amounts of interest.
Your hope is to hold this account for a long time. Its balance may go up and down, but use it as a way to pull in some passive income, no matter how slight.
You can open a savings account at a bank. A lot of people choose this option.
You can link it to your checking account as overdraft protection.
Most banks are insured by the FDIC, which protects your money against theft. Ask a representative to make sure your account is covered.
However, the interest rate is really low, like less than 1% of your balance per year.
They will probably have monthly fees, a minimum balance or transaction fees.
The easy accessibility can make it more tempting to pull out money when you shouldn’t.
Online Savings Account (These are the SECRET to DOUBLING your return!)
Online Accounts are available at many brick and mortar institutions and many strictly online companies.
This means that at some you can visit a local branch, but the online banks may not have a branch you can visit.
Many companies will issue you a debit card to access funds.
If you don’t have access to a debit card, transactions can take up to a few days to process.
Online savings account interest rates are much higher than traditional banks. They can be as high as 2.15%. 2.15% is more than double the return on a banked based savings account.
Some will have no fees, while others will have only minimal fees.
A credit union is like a bank, but it runs as a not for profit. Banks are for-profit institutions.
Credit Unions aren’t open to everyone, you have to qualify. In my area, there is a credit union open to any one who lives in my state. Marine Federal Credit Union is an institution that caters to the members of the armed forces.
This means they usually have fewer fees and special programs to help you save for different things.
They may also do credit counseling or home loan education programs.
Want to hear more about credit unions? You should! Leave me a comment below.
PS: Join my Facebook group and meet other moms taking control of their money!
Hi! I am Ali, a homeschool mom who is passionate about science, managing my money and time well. Unfortunately, with an army of tiny faces, I am always still kind of a mess.
I was tired of not having a judgement free place to talk about money troubles with other moms. So I created one!
Click on the picture above to join my Facebook Group, Money Savvy Mommas.